I'm currently working on a homebrew system and one concept I was intending to incorperate is that there is no in-game currency; items are traded using a barter system.
The thing is, how do I set a 'base price' to measure the worth of an item against?

For example, how do I indicate that generally a sword is worth 3 skins worth of water but a dagger is only worth 1?

I had thought to have units of water as a base price for every item of equipment, but then that just seems to be changing one currency for another.

Perhaps you could average the work required to produce an item and its "perceived market value". But keeping the "real price" to the GM.
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RofloFeb 22 '13 at 14:39

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As an aside, units of water are a poor choice as a unit of measurement (except in a nomadic desert culture). They're almost guaranteed to be worthless to any stationary merchant, as the first thing they're going to do when creating a homestead is dig a well. Similarly, any route frequented by merchants is pretty-much guaranteed to have freely accessible water.
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AllanFeb 22 '13 at 17:39

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It's very important to note that the idea of currencies arising out of the inefficiencies of barter systems is a fiction of economists. All anthropological evidence shows that barter economies are a modern phenomena, only appearing after modern economies fall apart. The way ancient economies worked is actually very close to your thought -- all items that were legerable did have assigned prices, but currency itself was extremely rare. The notion of price and value only came up in terms of taxes (to the state or to your religious organization).
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ChuuFeb 22 '13 at 18:50

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@Chuu - That's the kind of statement that is good to back up with a link to something for further reading. So, link added! (Not that Wikipedia is the be-all-and-end-all of research, but it's enough for these purposes.)
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BobsonFeb 22 '13 at 19:20

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@Bobson Sorry for misunderstanding. The idea of barter economies predating modern economies is so ingrained thanks to Adam Smith that most people immediately question any statement to the contrary.
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ChuuFeb 22 '13 at 20:50

7 Answers
7

If you want your players' experience to actually "feel like" barter, coming up with an absolute value for everything is self-defeating. You end up with a de-facto currency system that just abstracts away all of the bartering. It's kinda like writing "500 gp worth of gems" on your character sheet in D&D — it's something players do when they don't actually care about the gems.

Barter primarily exists when resources are fairly scarce and economic activity is fairly local. As such, haggling and availability are much, much more important than any kind of standardized value.

To create a barter-like system that's still light enough for play, I would only really concern myself with "tiers" of value. Try to break down goods in very general terms like these:

Worth about a day's peasant labor.

Worth about a month's peasant labor.

Worth about a year's peasant labor (might be equivalent to about a month for a skilled craftsman, or a day for a wealthy and powerful person).

Worth about a month's income for wealthy and powerful person.

Worth about a year's income for a wealth and powerful person.

Worth many years' income for a wealth and powerful person, i.e. a massive investment or a national building project.

This tells you what you really need to know, which is whether the value of a sword is in the same general ballpark as a horse. Knowing whether a sword is worth two horses or one horse is worth two swords... well, that really is all about how much someone is willing to part with his horses and how well you can talk up that sword. You can use some very simple die rolls here or add more back-and-forth mechanical complexity, depending on your preferences (my recommendation is to have the quick-and-easy system as a fallback, at least, because not every transaction needs to be involved).

To make it feel like barter, you also have to keep the volume of stuff going around manageable, so everyone can actually think of their stuff as individual objects on some level (grouping commonly-used things into "kits" is sensible here). Remember that stuff too far below your economic level is effectively trivial; stuff too far above it is functionally untradeable.

One additional benefit of a somewhat abstract system like this is that you can easily adapt it towards gift-giving or reputation economies. Or regular currency-based economies with any kind of the kind of price fluctuations that are normal in nearly every society. Which is convenient if the PCs travel a bit and run into people who practice trade differently from the way they do.

I think you should seriously consider dropping the barter system idea. Why?

Definition

First, lets define what do we mean by "barter system" - for the use of this answer, a barter system is one where you pay for some goods with other goods of any choosing agreed upon by the seller and customer. So, a setting where everything would be priced in water is not, in fact, a barter setting. Its just changing the currency from gold to another valueable resource thats hard to come by.

Barter is good for small scale tribal

A barter system is unmanagable with anything with complex production processes, high resource needs etc. To make something complex and time consuming, youll have problems in selling it for all the things you need. If a shirt, boots and pants are all made by different people, and together they hold a value of 1 horse, how do you sell your horse to get clothing? Especially in a situation where all the clothes produces already traded their goods amongst themselves, and the shoemaker already has a shirt and trousers?

More detailed example

To make a sword, you need to have lots of iron, time and skill. You need a workshop. Proper forging, heat treating and sharpening a blade are specialised skills, and in medieval many manufacturers specialised in only one of those. Other people mined the iron, other people formed it to iron bars. Now, how do you see paying all these people by one customer? Does he bring a sack of potatoes to pay for the sword? How are those potatoes distributed to all the people who took part in the production process? Who transports them? You may say that the blacksmiths buys the iron from the miners, The sharpener buys the blades from the blacksmith etc etc, you form a chain. Thats hardly managable and forms other problems. The merchant may accept payment in potatoes, but what if the blacksmith hates potatoes? Or has tons of potatoes already? If a sword os worth 3 metric tons of potatoes, how do you expect to pay for it in potatoes? No one will accept such a payment. On the other hand, if you have only a golden ring worth a whole inn, how do you pay for a one nights stay and a meal? What if no one wants your sword, despite the fact that making it is difficult and time consuming, an therefore the sword is worth a lot? If nobody needs it, its worth nothing!

Money is great

I have yet to see a working barter system or model. They cant really work, money is the great liberator. It eliminates so many of the mentioned problems. The big power of money comes from the fact that people believe it works. When everyone believes that he can trade gold pieces/skins of water/ printed paper bills for anything they need, they will be willing to give you what they got to sell in exchange for them. If there is no such belief, any form of advanced trading becomes almost impossible.

If you really want a barter system in your setting, accept the consequences

If you really want to go for a real barter system in your setting, go ahead. But know it will be very difficult to create civilized cities in such a system. Maybe in a primitive/tribal setting, where everyone is more or less self sufficient and there arent many items that need specialisation in order to be manufactured, and if so, they are extremely high in demand? (like medicine/healing services etc) In such a situation a specialist would be sustained by the society and offer his skills as needed (a doctor/shaman is worth being fed even if no one is currently sick).

So to answer the questions directly:

For example, how do I indicate that generally a sword is worth 3 skins worth of water but a dagger is only worth 1?

You dont. If using water as a currency, this is no barter system, just a currency different than gold. And if water is not the currency, you cant indicate how much a dagger is worth, as it depends totally on the need of the buyer/seller. If you last had water 3 days ago, youd give BOTH your sword and dagger for a single glass. People doing transactions with you will always take advantage of that. Your players will never be able to tell how much a beer will cost them and can they afford it.

Are there any systems with a similar mechanic?

There is a Polish system called Neuroshima, but first of all, it didnt use a factual barter system after all, and second of all, many players disliked that feature and made workarounds for it. The authors used a "virtual" value for items, called "gambles". There was no such physical thing, but it was agreed that one bullt 9mm is worth around 1gamble and most people used ammunition and medicines as a form of currency. I know of no "true barter" systems, as they cannot be actually regulated by mechanics, unless prices depending only on persuasion rolls and situational modifiers.

-1 - while it's a nicely worded answer, and very indepth on the cons of using a barter system, it doesn't answer the asked question. Answering the question, then pointing out the pitfalls is one thing- but not answering the question at all doesn't sit well with me.
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wraith808Apr 29 '13 at 15:15

What I would do is to write (OK, I'd probably crib it from a setting I liked) a 'price list at the market outside the King's palace', perhaps expressed in terms of a day's pay for an unskilled labourer. Unless you're willing to spend a month travelling there, the actual value of your goods (or labour) will be noticeably different, but it is close enough to make bargaining realistic.

I think this defeats the whole purpose of my approach, to be honest. Which is to be simple and not very granular, on purpose. It's very easy to rank things by orders of magnitude; it's time-consuming to try to come up with specific value ratios between roughly similar things, and the in-play payoff is very minor at best.
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Alex PAug 27 '13 at 16:09

When bartering, every single transaction is treated on its own merits. Each side looks at what it has to offer and what it wants and builds a deal based on that. Value isn't measured in anything like the same way we do it today.

In many barter societies, food is the limiting factor. Valuable goods and services are those that provide food, water and safety. The harder it is to make for yourself, the more valuable it becomes.

Currencies really aren't that complex to figure out and any society beyond primitive agriculture will generally have something to measure worth against. This doesn't have to be precious metals. You've identified units of water as a possible currency. England at one point used split tally sticks as a form of government-backed currency. It's possible to imagine anything whose authentic creation can be limited as a form of currency.

A game example of strange currency is the Rokugani koku. One koku is always worth an amount of rice equal to that needed to support one man for a year. This makes for a fluctuating currency market that always helps deliver the important thing - rice to the table.

I don't think that this is entirely true that every transaction is treated on its own merits. If it was the case there would be an opportunity to 'dutch booking'-like operations which would guaranteed profit (in practice it would move market toward equilibrium). Sure it is harder to figure out how but if sheep is worth 2 hens, hen is worth 60 eggs and sheep is worth 100 eggs then it is easy to sell sheep for hens and then hens for eggs and then eggs for sheep netting 20 eggs profit. (I omit the notion of liquidity as by definition money == most liquid good).
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Maciej PiechotkaFeb 23 '13 at 12:04

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That would work great - in a liquid system where you aren't dealing with the same people over and over. Most barter economies simply don't have the market volume to allow that. Also, "each transaction is treated on its own merits" means exactly that. What's worth 100 eggs to me today might be worth 50 or even less tomorrow after somebody else trades me eggs for a bale of wool.
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Simon GillFeb 23 '13 at 21:48

My recommendation is to actually set up a money system behind the screen. Something like knowing that 3 units buys a chicken, 6 buys a goat, 10 buys a longsword. But only keep these weights and measures on a list behind the screen so yo know what's actually fair. Then we get to the fun part: Haggling. Everything holds a different value to everyone, and convincing someone you're trading with of the same value (or just being greedy) is where everything comes into play in the barter system.

This is where I'd lean... if you want to barter, have the value's hidden. It would also allow you to adjust prices behind the scenes. Drought? That copper helm you found got you 10 chickens last year... A similar one this year it only gets you 7.
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WernerCDFeb 22 '13 at 20:25

THe problem with this approach is that it means that the players have no firm idea what anything is worth, but every NPC does: As a result, players will likely get the short end of the stick every time they head to the market.
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GMJoeFeb 25 '13 at 4:15

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The Appraise Skill is so highly overlooked. Especially if the NPC is untrained.
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CatLordFeb 25 '13 at 4:47

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@CatLord True, a carefully-implemented skill system could sole the issue, but it'd need to take into account 1) Varying levels of personal familiarity with item value based on social class, item rarity and etc., and 2) Mechanics for describing exactly what happens when an NPC fails their roll - Players can just make a rough guess, but the GM probably knows the correct answers, and needs a way of emulating the error. It's doable, but tricky.
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GMJoeFeb 26 '13 at 3:42

I think what you're attempting isn't possible without setting up a de facto currency and might not be all that productive. Typically barter systems hold very little long term consistency in terms of the relative value of items. Valuation of a given item against another will vary from individual to individual and by even greater margins from place to place and over time.

However, I do understand the desire to lay something down to put people into the right ballpark.

So - how would I balance these two? I think I'd be tempted to write the 'equipment catalogue' chapter from the perspective of some NPCs. Have the the blacksmith of one of your towns explain what he'd accept in exchange for a sword and have the farmer explain what he'd want to hand over a bushel of corn in a good and poor harvest year and so on...